Nanny taxes. It’s important to pay them, even if it seems like so many people don’t.
Here’s a reminder of why it’s important to pay nanny taxes, and the added benefits of using a nanny payroll service.
1 - It’s legal.
This is the easiest answer anyone can give. You won’t have to worry about the IRS, and using a payroll service can make it even easier to document all of your nanny taxes and pay stubs if the IRS were to ever contact you.
2 - Your nanny is covered in the worst-case scenario.
Say you were to lose your job and were forced to lay off your nanny. You can feel more at ease knowing that she will get unemployment insurance because you paid legally (this is something your payroll service can help them with).
Alternatively, if this were to happen and you weren’t paying taxes, most households get caught when their nannies apply for assistance.
3 - It’s easy.
All you need to do it fill out the paperwork, have your nanny fill out their paperwork, and then your nanny submits their hours each week.
You don’t have to worry about deducting federal and state payments yourself, dealing with personal checks, or any of the other complicated math that can arise.
4 - Tax breaks.
You can receive the child care tax credit, and while it isn’t a lot, it is something.
5 - Your nanny has documented income.
If your nanny wants to take out a loan to buy a car or a house, they need to prove that they have a job. Providing that proof is important for their future, and their family’s future.